As investors take a hint from an increase revision of global production and inventory forecast in a USDA report, Asian wheat prices may decrease this week on the back of ample supply.

The most-actively traded March wheat contract on the CBOT may fall to around US$5.80 a bushel from US$5.97/bushel, market participants said.

"Wheat is probably the weakest in the grains complex, because almost all major exporting countries are harvesting bumper crops," said a Singapore-based executive with a global commodities trading company.

CBOT wheat futures will likely stay below US$6/bushel for the next few months, he said.

The USDA Friday (Dec 9) revised its global wheat output forecast for the 2011-12 aggregate marketing year by more than five million tonnes to a record 689 million tonnes, up 5% from 2010-11's actual production.

Significant supply pressure is coming from Russia, and a record crop is being harvested in Australia, Okato Shoji Co. Deputy General Manager Koname Gokon said.

Last week, Australia revised its wheat output forecast for the marketing year that started October 1 to a record 28.3 million tonnes.

"There is a plenty of wheat around, and exporters are vying with one another to offer lower rates," said another trader in Singapore.

Until recently, wheat from the Black Sea region was among the cheapest, around US$245/tonne, free on board, but now Argentina is offering the grain around US$220/tonne, FOB, for shipment early next year--though freight costs from South America will be higher.

Meanwhile, Australia has captured a large part of the East Asian feed-wheat market, offering the grain on a delivered basis around US$254/tonne, cost and freight.

Wheat has already displaced corn to the maximum extent possible as a component of feed meal, traders said.

This means wheat inventories will build next year, they said, as reflected in the USDA report: It increased its global wheat ending stocks forecast for 2011-12 by almost six million tonnes, to 208.5 million tonnes. It revised upward its forecast of US ending stocks for the marketing year ending May 31 by 6%, to almost 24 million tonnes, just slightly lower than its annual export numbers.

The US, the world's largest wheat exporter, is finding it difficult to sell its grain because of the availability of cheaper alternatives.